dolution

 

1. Fill in the blanks to make the following statements correct.

 

a. The shut-down price is the price at which the firm can just cover its _____.

 

b. If the average variable cost of producing any given level of output exceeds the price at which it can be sold, then the firm should _____.

 

c. If a firm is producing a level of output such that MC > MR, that firm should _____ output.

 

d. If a firm is producing a level of output such that MC MR, that firm should _____ output.

 

e. The profit-maximizing level of output for a price-taking firm is the output at which MR and MC are _____ and the gap between TR and TC is _____.

 

f. If a perfectly competitive firm is producing its profitmaximizing level of output and the price of its output rises, then MR will _____ be than MC and the firm should _____ output.